california high-speed rail appeal court ruling

8/12/2019 California High-Speed Rail Appeal Court Ruling

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Adrienne D. Weil for Metropolitan Transportation Commission as Amicus Curiaeon behalf of Petitioners.

Robert Fabela for Santa Clara Valley Transportation Authority as Amicus Curiaeon behalf of Petitioners.

Therese M. Stewart, Chief Deputy City Attorney, for City and County of SanFrancisco as Amicus Curiae on behalf of Petitioners.

Altshuler Berzon, Scott A. Kronland, and Connie K. Chan for State Building andConstruction Trades Council of California, AFL-CIO, as Amicus Curiae on behalf ofPetitioners.

Gresham Savage Nolan & Tilden, Ellen Berkowitz, Stefanie G. Field, Daniel F.

Freedman; Kelly Crane Law and Peter D. Kelly, III, for the Hon. Cathleen Galgiani,California State Senator, as Amicus Curiae on behalf of Petitioners.

John F. Krattli, County Counsel, Charles M. Safer, Assistant County Counsel, andRichard P. Chastang, Principal Deputy County Counsel, for Los Angeles CountyMetropolitan Transportation Authority as Amicus Curiae on behalf of Petitioners.

Joanna G. Africa for Southern California Association of Governments as AmicusCuriae on behalf of Petitioners.

No appearance for Respondent.

Howard Jarvis Taxpayers Foundation, Jonathan M. Coupal and Timothy A. Bittlefor Real Party in Interest Howard Jarvis Taxpayers Association.

Griswold, LaSalle, Cobb, Dowd & Gin, and Raymond L. Carlson for Real Partiesin Interest Kings County Water District and Citizens for California High-Speed RailAccountability.

Law Offices of Stuart M. Flashman, Stuart M. Flashman; and Michael J. Brady forReal Parties in Interest John Tos, Aaron Fukuda, and County of Kings.

Theresa A. Goldner, County Counsel, Mark L. Nations, Chief Deputy CountyCounsel, and Nicole M. Misner, Deputy County Counsel, for Real Party in InterestCounty of Kern.

Pillsbury Winthrop Shaw Pittman, Andrew D. Bluth, Michael R. Barr, Kevin M.Fong, and Blaine I. Green for Real Party in Interest Union Pacific Railroad Company.


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Pacific Legal Foundation, Meriem L. Hubbard, Harold E. Johnson, and Ralph W.Kasarda for Real Party in Interest First Free Will Baptist Church.

Substantial legal questions loom in the trial court as to whether the high-speed rail

project the California High-Speed Rail Authority (Authority) seeks to build is the project

approved by the voters in 2008. Substantial financial and environmental questions

remain to be answered by the Authority in the final funding plan the voters required for

each corridor or usable segment of the project. (Sts. & Hy. Code, 2704.08, subd. (d).) 1

But those questions are not before us in these validation and mandamus proceedings.

The scope of our decision is quite narrow. Applying time-honored principles of statutory

construction, separation of powers, and the availability of extraordinary writ relief, we

conclude:

1. Contrary to the trial courts determination, the High -Speed Passenger Train

Finance Committee properly found that issuance of bonds for the project was necessary

or desirable.

2. The preliminary section 2704.08, subdivision (c) funding plan was intended to provide guidance to the Legislature in acting on the Authoritys appropriation request.

Because the Legislature appropriated bond proceeds following receipt of the preliminary

funding plan approved by the Authority, the preliminary funding plan has served its

purpose. A writ of mandamus will not lie to compel the idle act of rescinding and

redoing it.

We therefore will issue a peremptory writ of mandate directing the trial court to

enter judgment validating the authorization of the bond issuance for purposes of the 2008

voter approved Safe, Reliable High-Speed Passenger Train Bond Act. (Bond Act)

1 Further undesignated statutory references are to the Streets and Highways Code.


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( 2704 et seq.; see 2704.04, subd. (a).) Further challenges by real parties in interest to

the use of bond proceeds are premature. The writ will also compel the trial court to

vacate its rulings requiring the Authority to perform the idle act of redoing the

preliminary section 2704.08, subdivision (c) funding plan after the Legislature

appropriated the bond funds.

FACTUAL AND PROCEDURAL CONTEXT 2

On November 4, 2008, the voters of California passed Proposition 1A, the Bond

Act, to initiate the construction of a hig h-speed train system that connects the San

Francisco Transbay Terminal to Los Angeles Union Station and Anaheim, and links the

states major population centers, including Sacramento, the San Francisco Bay Area, theCentral Valley, Los Angeles, the Inland Empire, Orange County, and San Diego . . . .

( 2704.04, subd. (a); see 2704 et seq.) The Bond Act authorizes the issuance and sale

of $9.95 billion in general obligation bonds upon appropriation by the Legislature

( 2704.04, subd. (b)(1); see 2704.10) to begin construction of a high-speed train

system in California consistent with the [A]uthoritys certified environmental impact

reports of November 2005 and July 9, 2008, as subsequently modified pursuant to

environmental studies conducted by the [A] uthority ( 2704.06).

The Bond Act sets forth specific criteria for the bond proceeds as well as for the

design and capacity of the system. For instance, no more than $950 million of bond

proceeds can be used for non-high-speed rail connectivity with high-speed rail lines.

( 2704.095.) High-speed rail, the Act provides, will feature electric trains capable of

operating at speeds of 200 miles per hour or greater, guaranteed maximum travel times

between major destinations, and achievable operating headway (time between successive

trains) of five minutes or less. ( 2704.09, subds. (a), (b) & (c).)

2 We refer to the parties throughout this opinion by their appellate court designations.


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The Authority is the administrative body with primary responsibility for

overseeing the planning and construction of the high-speed rail system. (Sts. & Hy.

Code, 2704.01, term (b); Pub. Util. Code, 185020.) The Authority is subject to the

terms of the financing program set forth in article 2 and the fiscal provisions set forth in

article 3 of the Bond Act. (Sts. & Hy. Code, 2704.04 et seq., 2704.10 et seq.) The

Argument in favor of Proposition 1A promised the voters: Proposition 1A will protect

taxpayer interests. [] Public oversight and detailed independent review of financing

plans. [] Matching private and federal funding to be identified BEFORE state bond

funds are spent. [] 90% of the bond funds to be spent on system construction, not

more studies, plans, and engineering activities. (Voter Information Guide, General Elec.(Nov. 4, 2008) argument in favor of Prop. 1A, p. 6.)

The Bond Act incorporates by reference the State General Obligation Bond Law,

Government Code section 16720 et seq. (Bond Law), which provides a uniform

procedure for authorizing the issuance, sale, and repayment of general obligation bonds

on behalf of the state. (Sts. & Hy. Code, 2704.11.) The Bond Act designates the

Authority to act as the board for purposes of all Bond Law procedures (Sts. & Hy.

Code, 2704.12, subd. (b)) , including the authority to request that the [c]ommittee

authorize the issuance of bonds (Gov. Code, 16722, term (d)). The Bond Act also

creates a High-Speed Passenger Train Finance Committee (Finance Committee) to serve

in the same capacity as the [c]ommittee named in the Bond Law, [s]olely for the

purpose of authorizing the issuance and sale of the bonds authorized by [the Bond Act] .

(Sts. & Hy. Code, 2704.12, subd. (a).)

Article 2, section 2704.08 is at the heart of the writ proceeding now before us.

Pursuant to subdivision (a) of section 2704.08, the bond proceeds cannot be used for

more than 50 percent of the total cost of construction for each usable segment or corridor.

Corridor, as used in the Bond Act, is a portion of the high -speed train system as


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described in Section 2704.04 ( 2704.01, term (f)), 3 and usable segment is a portion

of a corridor that includes at least two stations ( 2704.01, term (g)). Section 2704.08

compels the Authority to prepare a preliminary funding plan ( 2704.08, subd. (c)) before

the Legislature appropriates the funds and a final funding plan ( 2704.08, subd. (d))

before the proceeds of bonds are committed for expenditure. 4 We must determine

whether a writ of mandamus is an appropriate remedy when, despite receipt of an

allegedly deficient preliminary funding plan, the Legislature appropriates the requested

funds, thereby authorizing the issuance and sale of bonds.

Streets and Highways Code section 2704.08, subdivision (c) provides as follows:

(c)(1) No later than 90 days prior to the submittal to the Legislature and the Governor of

3 Seven corridors are described:(A) Sacramento to Stockton to Fresno.(B) San Francisco Transbay Terminal to San Jose to Fresno.(C) Oakland to San Jose.(D) Fresno to Bakersfield to Palmdale to Los Angeles Union Station.(E) Los Angeles Union Station to Riverside to San Diego.(F) Los Angeles Union Station to Anaheim to Irvine.(G) Merced to Stockton to Oakland and San Francisco via the Altamont Corridor.

4 We acknowledge that the statute does not characterize the Streets and Highways Codesection 2704.08, subdivision (c) detailed funding plan as preliminary or thesection 2704.08, subdivision (d) detailed funding plan as final. A contextual reading ofthe Bond Act, however, reveals that the two funding plans are part of a comprehensivelegislative scheme: the first to be presented to the Legislature before the appropriation of

bond funds and the second to be approved before the actual expenditure of bond proceeds. The inclusion of the subdivision (d) plan is an explicit recognition that new,

and possibly different, information will be needed to supplement or augment the preappropriation subdivision (c) plan, and further, that the preappropriation orpreliminary plan is in no way int ended to be a final or conclusive administrative action.Indeed, the Legislature characterized the subdivision (c) funding plan as thepreappropriation review process and the subdivision (d) funding plan as thepreexpenditure review process. (Pub. Ut il. Code, 185033, subd. (b)(2).) For thesereasons, we will refer to the section 2704.08, subdivision (c) plan as preliminary and thesection 2704.08, subdivision (d) plan as final.


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the initial request for appropriation of proceeds of bonds authorized by this chapter for

any eligible capital costs on each corridor, or usable segment thereof . . . the authority

shall have approved and submitted to the Director of Finance, the peer review group

established pursuant to Section 185035 of the Public Utilities Code, and the policy

committees with jurisdiction over transportation matters and the fiscal committees in both

houses of the Legislature, a detailed funding plan for that corridor or a usable segment

thereof.

(2) The plan shall include, identify, or certify to all of the following:

(A) The corridor, or usable segment thereof, in which the authority is proposing

to invest bond proceeds.(B) A description of the expected terms and conditions associated with any lease

agreement or franchise agreement proposed to be entered into by the authority and any

other party for the construction or operation of passenger train service along the corridor

or usable segment thereof.

(C) The estimated full cost of constructing the corridor or usable segment thereof,

including an estimate of cost escalation during construction and appropriate reserves for

contingencies.

(D) The sources of all funds to be invested in the corridor, or usable segment

thereof, and the anticipated time of receipt of those funds based on expected

commitments, authorizations, agreements, allocations, or other means.

(E) The projected ridership and operating revenue estimate based on projected

high-speed passenger train operations on the corridor or usable segment.

(F) All known or foreseeable risks associated with the construction and operation

of high-speed passenger train service along the corridor or usable segment thereof and the

process and actions the authority will undertake to manage those risks.

(G) Construction of the corridor or usable segment thereof can be completed as

proposed in the plan.


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(H) The corridor or usable segment thereof would be suitable and ready for high-

speed train operation.

(I) One or more passenger service providers can begin using the tracks or stations

for passenger train service.

(J) The planned passenger service by the authority in the corridor or usable

segment thereof will not require a local, state, or federal operating subsidy.

(K) The authority has completed all necessary project level environmental

clearances necessary to proceed to construction.

Section 2704.08, subdivision (d) requires a final, preexpenditure funding plan as

follows: Prior to com mitting any proceeds of bonds described in paragraph (1) ofsubdivision (b) of Section 2704.04 for expenditure for construction and real property and

equipment acquisition on each corridor, or usable segment thereof, other than for costs

described in subdivision (g), the authority shall have approved and concurrently

submitted to the Director of Finance and the Chairperson of the Joint Legislative Budget

Committee the following: (1) a detailed funding plan for that corridor or usable segment

thereof that (A) identifies the corridor or usable segment thereof, and the estimated full

cost of constructing the corridor or usable segment thereof, (B) identifies the sources of

all funds to be used and anticipates time of receipt thereof based on offered commitments

by private parties, and authorizations, allocations, or other assurances received from

governmental agencies, (C) includes a projected ridership and operating revenue report,

(D) includes a construction cost projection including estimates of cost escalation during

construction and appropriate reserves for contingencies, (E) includes a report describing

any material changes from the plan submitted pursuant to subdivision (c) for this corridor

or usable segment thereof, and (F) describes the terms and conditions associated with any

agreement proposed to be entered into by the authority and any other party for the

construction or operation of passenger train service along the corridor or usable segment

thereof; and (2) a report or reports, prepared by one or more financial services firms,


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financial consulting firms, or other consultants, independent of any parties, other than the

authority, involved in funding or constructing the high-speed train system, indicating that

(A) construction of the corridor or usable segment thereof can be completed as proposed

in the plan submitted pursuant to paragraph (1), (B) if so completed, the corridor or

usable segment thereof would be suitable and ready for high-speed train operation,

(C) upon completion, one or more passenger service providers can begin using the tracks

or stations for passenger train service, (D) the planned passenger train service to be

provided by the authority, or pursuant to its authority, will not require operating subsidy,

and (E) an assessment of risk and the risk mitigation strategies proposed to be employed.

The Director of Finance shall review the plan within 60 days of its submission by theauthority and, after receiving any communication from the Joint Legislative Budget

Committee, if the director finds that the plan is likely to be successfully implemented as

proposed, the authority may enter into commitments to expend bond funds that are

subject to this subdivision and accept offered commitments from private parties.

Proposition 1A also established the Finance Committee, which consists of five

senior government officials: the California State Treasurer; the Director of the

Department of Finance; the California State Controller; the Secretary of Business,

Transportation and Housing; and the chairperson of the Authority. ( 2704.12, subd. (a).)

The Finance Committee is the administrative body with primary responsibility for

authorizing the issuance of bonds that will be used to finance initial construction of the

high-speed rail system. ( Ibid .) Section 2704.13 provides, in relevant part: The

committee shall determine whether or not it is necessary or desirable to issue bonds

authorized pursuant to this chapter in order to carry out the actions specified in

Sections 2704.06 and 2704.095 and, if so, the amount of bonds to be issued and sold.

Successive issues of bonds may be issued and sold to carry out those actions

progressively, and it is not necessary that all of the bonds authorized be issued and sold at

any one time. The committee shall consider program funding needs, revenue projections,


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financial market conditions, and other necessary factors in determining the term for the

bonds to be issued. In addition to all other powers specifically granted in this chapter and

the State General Obligation Bond Law, the committee may do all things necessary or

convenient to carry out the powers and purposes of this article, including the approval of

any indenture relating to the bonds, and the delegation of necessary duties to the

chairperson and to the Treasurer as ag ent for the sale of the bonds.

The peer review group plays another significant role in providing financial

oversight and monitoring the feasibility of the Authoritys plans. Public Utilities Code

section 185035 provides, in relevant part: (a) The authority shall establish an

independent peer review group for the purpose of reviewing the planning, engineering,financing, and other elements of the authoritys plans and issuing an analysis of

appropriateness and accuracy of the auth oritys assumptions and an analysis of the

viability of the authoritys financing plan, including the funding plan for each corridor

required pursuant to subdivision (b) of Section 2704.08 of the Streets and Highways

Code. [] . . . [] (c) The peer revi ew group shall evaluate the authoritys funding plans

and prepare its independent judgment as to the feasibility and reasonableness of the plans,

appropriateness of assumptions, analyses, and estimates, and any other observations or

evaluations it deems ne cessary.

The Authority is also required to prepare, publish, adopt, and submit to the

Legislature, not later than January 1, 2012, and every two years thereafter, a business

plan. At least 60 days prior to the publication of the plan, the authority shall publish a

draft business plan for public review and comment. The draft plan shall also be

submitted to the Senate Committee on Transportation and Housing, the Assembly

Committee on Transportation, the Senate Committee on Budget and Fiscal Review, and

the Assembly Committee on Budget. (Pub. Util. Code, 185033, former subd. (a), as

amended by Stats. 2009, ch. 618, 1 .) The business plan shall identify all of the

following: the type of service the authority anticipates it will develop, such as local,


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express, commuter, regional, or interregional; a description of the primary benefits the

system will provide; a forecast of the anticipated patronage, operating and maintenance

costs, and capital costs for the system; an estimate and description of the total anticipated

federal, state, local, and other funds the authority intends to access to fund the

construction and operation of the system; and the proposed chronology for the

construction of the eligible corridors of the statewide high-speed train system. The

business plan shall also include a discussion of all reasonably foreseeable risks the

project may encounter, including, but not limited to, risks associated with the projects

finances, patronage, right-of-way acquisition, environmental clearances, construction,

equipment, and technology, and other risks associated with the projects development.The plan shall describe the authoritys strategies, processes, or other actions it intends to

utilize to manage those risks. ( Ibid .)

The Authority certified the preliminary funding plan two days after issuing the

Draft 2012 Business Plan (draft business plan). The draft business plan identified the

corridor , or usable segment thereof, as one of two alternative initial operating sections

(IOS): IOS-North, a usable segment of approximately 290 miles from Bakersfield in the

south to San Jose in the north, or IOS-South, an alternative usable segment of

approximately 300 miles from Merced in the north to the San Fernando Valley in the

south. To the consternation of the peer review group, the preliminary funding plan

expressly incorporated the draft business plan and proposed an investment of $2.684

billion in bonds authorized under Proposition 1A, the amount needed to supplement the

$3.316 billion in federal funds awarded for construction of the initial construction section

(ICS), a 130-mile conventional rail portion of the system. Because of the stringent 60-

day deadline to complete its assessment of the preliminary funding plan, the peer review

group was put in the position of reaching findings and conclusions on the Funding Plan

based upon the content of a foundational Business Plan document that is still in draft

form. ( See Pub. Util. Code, 185035.)


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On November 14, 2011, John Tos, Aaron Fukuda, and County of Kings (the Tos

real parties) filed their initial complaint for declaratory relief, injunctive relief, and for

relief pursuant to Code of Civil Procedure section 526a and the private attorney general

doctrine (Tos action), alleging, among other things, that the preliminary funding plan

violated the Bond Act. On December 13, 2011, the complaint was amended to add a

cause of action seeking relief in the form of a writ of mandamus/prohibition. On

January 3, 2012, the peer review group submitted a report to the Legislature outlining

weaknesses in the preliminary funding plan and draft business plan, and offering a

number of suggestions to improve the viability of the high-speed rail project.

On April 19, 2012, the Authority adopted the R evised 2012 Business Plan (revised business plan). The revised business plan identifies a 300-mile usable

segment from Merced to the San Fernando Valley (IOS-South), but unlike the draft

business plan, the revised business p lan commits to build not just an i nitial construction

segment but in fact an Initial Operating Section (IOS) of high- speed rail. Moreover, t he

revised business p lan introduced a blended systems approach that integrates high -speed

rail with existing commuter lines in various urban areas. The revised business plan

states : Passengers will have more options, faster travel times, and greater reliability and

safety. . . . [] Benefits will be delivered faster through the adoption of the blended

approach and through investment in the bookends. Across the state, transportation

systems will be improved and jobs will be created through the implementation of those

improvements.

On April 17, 2012, the Legislative Analysts office (LAO) issued a report

providing a negative critique of the revised business plan for the Legislature. The report

states: In April 2012, the [Authority] released its most recent business plan that

estimates the cost of constructing the first phase of the high-speed train project at

$68 billion. However, the [Authority] only has secured about $9 billion in voter

approved bond funds and $3.5 billion in federal funds. Thus, the availability of future


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funding to construct the system is highly uncertain. (Legis. Analyst, The 2012-13

Budget: Funding Requests for High-Speed Rail, Apr. 17, 2012, p. 1.) Thus, the LAO

concludes: We find that [the Authority] has not provided sufficient detail and

justification to the Legislature regarding its plan to build a high-speed train system.

Specifically, funding for the project remains highly speculative and important details

have not been sorted out. We recommend the Legislature not approve the Governors

various budget proposals to provide additional funding for the project. However, we

recommend that some minimal funding be provided to continue planning efforts that are

currently underway. ( Ibid .)

On July 18, 2012, nearly four years after adoption of the Bond Act and afterextensive studies, planning, public hearings, and debate, the Legislature enacted Senate

Bill No. 1029 (Stats. 2012, ch. 152), thereby appropriating state funds and federal grants

for high-speed rail as follows:

A total of $819,333 ,000 for capital improvement projects to intercity and

commuter rail lines and urban rail systems that provide direct connectivity to the high-

speed train system and its facilities . . . . (Stats. 2012, ch. 152, 1, 2.)

Bookend funding of $1.1 billion for expenditure for state operations, local

assistance, or capital outlay . . . . (Stats. 2012, ch. 152, 3.)

A to tal of $48,354,000 [f]or capital outlay, High -Speed Rail Authority, payable

from the Federal Trust Fund . . . . (Stats. 2012, ch. 152, 4, 6.)

A total of $204,173,000 [f]or capital outlay, High -Speed Rail Authority, payable

from the High-Speed Passe nger Train Bond Fund . . . . (Stats. 2012, ch. 152, 5, 7.)

To acquire and build the IOS, $3,240,676,000, payable from the Federal Trust

Fund. (Stats. 2012, ch. 152, 8.)

To acquire and build the IOS, $2,609,076,000, payable from the High-Speed

Passenger Train Bond Fund. (Stats. 2012, ch. 152, 9.)


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As will be described in further detail, post , the Legislature itself enforced the rigid

reporting provisions of section 2704.08, subdivision (c) of the Bond Act by requiring the

Authority to submit additional reports and obtain additional approvals before the funds

appropriated could be encumbered. (Stats. 2012, ch. 152, 3.)

On March 18, 2013, the Authority adopted Resolution # HSRA 13-03 requesting

the Finance Committee to authorize issuance of bonds and commercial paper notes

under the Bond Act to provide funds for the projects as authorized in sections 2704.04

and 2704.06 of the California Streets and Highways Code in the aggregate principal

amount of $8,599,715,000. That same day, the Finance Committee, consistent with

section 2704.13, adopted Resolution IX (2013) declaring that it was necessary anddesirable to authorize the issuance hereunder of $8,599,715,000 in [the] principal

amount ( the Authorized Amount ) of general obligation bonds (t he Bonds ) and other

obligations pursuant to this Resolution to carry out the purposes of the Bond Act .

If our arithmetic is correct, therefore, in 2012 the Legislature appropriated a total

of $4,732,582,000 in Bond Act funds and $3,289,030,000 from the Federal Trust Fund to

finance high-speed rail in California. Of the $8,021,609,000 total funds appropriated by

the Legislature, approximately $6.1 billion was appropriated to finance IOS-South. In

2013 the Authority requested, and the Finance Committee authorized, the issuance of

bonds under the Bond Act in the aggregate principal amount of $8,599,715,000.

The following day, March 19, 2013, the Authority and the Finance Committee

filed a validation action to obtain a judgment validating the bonds so they could be sold

on the capital markets. (Code Civ. Proc., 860 et seq.; Gov, Code, 17700.) John Tos,

Aaron Fukuda, County of Kings, Howard Jarvis Taxpayers Association, Kings County

Water District, Citizens for California High-Speed Rail Accountability, Eugene Voiland,

County of Kern, and First Free Will Baptist Church opposed the action; Union Pacific

Railroad Company filed a responsive pleading as an interested party in the validation

action (collectively, real parties in interest).


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The trial court bifurcated the writ of mandate issues from the other remedies the

Tos real parties sought in the Tos action. Over time, the Tos real parties had amended

their complaint several times, with the operative allegations contained in the second

amended complaint, which set forth 12 sweeping causes of action. However, at the first

hearing on May 31, 2013, the scope of the petition for a writ of mandamus was narrowed

to two deficiencies in the preliminary funding plan, which are at issue before us in this

appeal.

First, the Tos real parties allege that it will cost at least an additional $20 billion to

complete the last 170 miles of the 300-mile usable segment, and contrary to the

mandatory terms of Proposition 1A, the sources of these funds have not been identifiedand committed. ( 2704.08, subd. (c)(2)(D) [ (2) The [preliminary funding] plan shall

include, identify, or certify to all of the following: [] . . . [] (D) The sources of all

funds to be invested in the corridor, or usable segment thereof, and the anticipated time of

receipt of those funds based on expected commitments, authorizations, agreements,

allocations, or other means.].)

Second, the Tos real parties complain that the Authority failed to obtain the

necessary environmental clearances before approving the preliminary funding plan.

( 2704.08, subd. (c)(2)(K) [ (2) The [preliminary funding] plan shall include, identify,

or certify to all of the following: [] . . . [] (K) The Authority has completed all

necessary project level environment al clearances necessary to proceed to construction.].)

[The Tos real parties] specifically allege that the environmental review process required

by Proposition 1A is far from complete, it is in its infancy with respect to the section

between Fresno and Bakersfield. In addition, major environmental litigation has just

been filed in the Central Valley challenging the adequacy of some of the environmental

studies. Additionally, [the Tos real parties] allege that the environmental clearances

necessary for defendants to commence construction of the Central Valley project have


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not been obtained from the U.S. Corps of Engineers, the U.S. Fish and Wildlife Service,

and the San Joaquin Valley Air Pollution Control District.

On August 16, 2013, the trial court issued a 15-page ruling explaining that the

preliminary funding plan submitted by the Authority to the Legislature did not comply

with the Bond Act. ( 2704.08, subd. (c)(2)(D) & (K).)

There is no dispute that the Authority identified the necessary funding sources for

the ICS, amounting to approximately $6 billion in combined federal and state funding.

The court pointed out, however, that section 2704.08, subdivision (c)(2)(D) requires

identification of funding sources for the entire IOS, and the full cost of completing IOS-

South was projected to be in excess of $26 billion. In the trial courts view,subdivision (c)(2) (D) required the Authority to identify sources of funds that were more

than merely theoretically possible, but instead were reasonably expected to be actually

available when needed. This is clear from the language of the statute requiring the

Authority to describe the anticipated time of receipt of those funds based on expected

commitments, authorizations, agreements, allocations, or oth er means. (Emphasis added

[by trial court].) Such language, especially the use of the highlighted terms anticipated

and expected , indicates that the identification of funds must be based on a reasonable

present expectation of receipt on a projected date, and not merely a hope or possibility

that such funds may become available.

The trial court quoted at some length from the draft business plan, rather than the

revised business plan. The court noted the draft business plan explicitly stated that

funds for construction of the remainder of the IOS would be identified at a later time

(not later than 2015) and candidly acknowledged that committed funding for

construction of the IOS in the years 2015 to 2021 is not fully identified , and that the

mix, timing, and amount of federal funding for later sections of the [high-speed rail] is

not known at this time. The court concluded, This language demonstrates that the


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funding plan failed to comply with the statute, because it simply did not identify funds

available for the completion of the entire IOS.

Rejecting arguments lodged by the Attorney General construing the statute to

allow completion of all environmental clearances before construction rather than before

the preliminary funding plan is ap proved, the trial court held: Subsection (K), on its

face, requires the Authority to certify that it has completed all necessary project level

environmental clearances necessary to proceed to construction. As the language from the

funding plan quoted above demonstrates, the plan does not address project level

environmental clearances for the entire IOS at all, but only addresses the ICS. Moreover,

the funding plan explicitly states that project level environmental clearances have not yet been completed even for the ICS. It is therefore manifest that the funding plan does not

comply with the plain language of the statute.

Although the trial court found the preliminary funding plan was deficient, the

court remained uncertain whether a writ of mandate would lie to compel the Authority to

rescind it in light of its conclusion that a writ would not issue to invalidate the legislative

appropriation both on substantive and procedural grounds.

Substantively, the court explained: Nothing in Section 2704.08 [,

subdivision] (c)(2), or elsewhere in Proposition 1A, provides that the Legislature shall not

or may not make an appropriation for the high-speed rail program if the initial funding

plan required by Section 2704.08[, subdivision] (c)(2) fails to comply with all the

requirements of the statute. Lacking such a consequence for the Authoritys non -

compliance, Proposition 1A appears to entrust the question of whether to make an

appropriation based on the funding plan to the Legislatures collective judgment. T he

terms of Proposition 1A itself give the Court no authority to interfere with that exercise

of judgment.

Procedurally, the court pointed out that the Tos real parties did not seek

invalidation of the legislative appropriation in the second amended complaint and raised


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the issue for the first time in their reply brief. The court subscribed to the general rule

that, in fairness to petitioners, arguments raised for the first time in reply would not be

considered.

If, as the trial court found, the appropriation was not subject to challenge, the

question posed is whether a writ of mandate to rescind the preliminary funding plan

would have any real and practical effect. The court asked for supplemental briefing to

determine whether the writ could invalidate any subsequent approvals by the Authority or

any of the other petitioners. If so, the court intimated that a writ might offer a real and

practical benefit.

A second hearing was held on November 8, 2013, and the court issued its secondruling on November 25, 2013. The trial court issued a writ of mandate directing the

Authority to rescind its approval of the November 3, 2011, preliminary funding plan

because the preparation and approval of a detailed funding plan that complies with all of

the requirements of Streets and Highways Code section 2704.08[, subdivision] (c) is a

necessary prerequisite for the preparation and approval of a second detailed funding plan

under subdivision (d) of the statute, which in turn is a necessary prerequisite to the

Authori tys expenditure of any bond proceeds for construction or real property and

equipment acquisition, other than for costs described in subdivision (g). Thus, the trial

court concluded, the writ would have a real and practical effect.

The court, however, denied the Tos real parties the many other remedies they

sought. It refused to issue a writ to invalidate any subsequent approvals made by the

Authority in reliance on the November 3, 2011, preliminary funding plan, including

contracts with Caltrans and Tutor-Perini-Parsons, because there was insufficient evidence

the Authority, in utilizing federal grant money, had violated any of the limitations set by

Proposition 1A and the contracts contained termination clauses to assure that the state did

not transgress those limitations. The court also refused to (1) enjoin the Authority from

submitting a final funding plan until its preliminary funding plan complies with


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section 2704.08, subdivision (c); (2) issue a temporary restraining order to prohibit the

Authority from using federal grant money; and (3) order an accounting of past and

projected expenditures on the high-speed rail project.

On the same day the trial court issued its ruling in the Tos action, it denied the

Authority and Finance Committees request for a validation judgment approving the

issuance of more than $8 billion in bonds. The court found that the Finance C ommittees

determination that issuance of the bonds was necessary or desirable was a quasi-

legislative act that must be supported by evidence in the record. The court explained that

it could find no evidence in the record of proceedings submitted by [the Authority and

the Finance Committee] that supports a determination that it was necessary or desirableto authorize the issuance of more than eight billion dollars in bonds under Proposition 1A

as of March 18, 2013. The record of proceedings in this matter consists of little more

than the Authoritys Resolution requesting that the Finance Committee authorize issuance

of bonds, and the Fina nce Committees Resolutions doing so. The Finance Committees

Resolutions contain bare findings of necessity and desirability which contain no

explanations of how, or on what basis, it made those findings. Specifically, the findings

contain no summary of the factors the Finance Committee considered and no description

of the content of any documentary or other evidence it may have received and

considered. Thus the findings themselves do not assist the Court in determining whether

those findings are suppor ted by any evidence.

The Authority, the Finance Committee, and others thereafter filed a petition for a

writ of mandamus for relief in both cases. 5 Petitioners ask us to issue a peremptory writ

5 Petitioners also include Governor Edmund G. Brown, Jr.; State Treasurer Bill Lockyer;Director of the Department of Finance, Michael Cohen; and Secretary of the StateTransportation Agency, Brian Kelly. Petitioners initially filed their petition with theCalifornia Supreme Court. The Supreme Court transferred the case to us.


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of mandate directing the trial court to vacate its writ in the Tos action and to vacate its

ruling in the validation case, and to enter a judgment validating the bonds authorized by

the Finance Committee.

DISCUSSION

I

The Validation Action

Neither the Bond Law, the Bond Act, nor any of the validation cases we could find

support the trial courts highly unusual scrutiny of the Finance Committees

determination that it is necessary or desirable to grant the Authoritys request to

authorize the issuance of the bonds. The Attorney General, supported by amici curiae,argues the trial courts notion that the voters intended the Finance Committee to serve as

the keeper of the check book not only thwarts progress building a high-speed rail

system in California, but jeopardizes the financing of public infrastructure throughout the

state by interfering with the Legislatures exercise of its appropriation authority, invents

judicial remedies where none are provided by law, and subverts the very purpose of the

validation statutes. We agree.

Validation actions embo dy a strong public policy to facilitate a public agencys

ability to finance infrastructure for the public good. Recognizing that litigation often

impairs a public agencys ability to sell bonds on the capital market, the validation

statutes place great importance on the need for a speedy and single dispositive final

judgment. We must construe the validating statutes so as to effectuate their purpose.

( Friedland v. City of Long Beach (1998) 62 Cal.App.4th 835, 842-843.)

By refusing to validate the authorization of bonds due to a lack of evidence in the

record of proceedings before the Finance Committee, the court imposed requirements on

the Finance Committee that do not appear in any of the governing statutes and thereby

denied the Authority the speedy, dispositive judgment the validation action was designed

to provide. Neither the Bond Law nor the specific Bond Act requires the Finance


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Committee to make any factual findings or to explain the basis for its determination.

Similarly, real parties in interest do not point to any statute that requires the Finance

Committee to hold an evidentiary hearing. Without limitation or restriction, the Bond

Act and the Bond Law grant the Finance Committee broad discretion to determine

whether it is necessary or desirable to authorize the issuance of bonds to carry out the

purposes of the Bond Act. (Sts. & Hy. Code, 2704.13; Gov. Code, 16722, subd. (a),

16730.)

Cases construing the necessary or desirable language uniformly recognize the

breadth of discretion it confers upon an administrative or legislative body. In construing

the necessary or desirable language, the Fourth District Court of Appeal wrote that thewords are probably so elastic as not to impose any substantive requirements. ( Boelts v.

City of Lake Forest (2005) 127 Cal.App.4th 116, 128, fn. 13 ( Boelts ).) Similarly, over

eight decades ago, the Second Appellate District held that a legislative bodys discretion

should not be curtailed by implying requirements that it justify its determination of

necessary or desirable. ( City of Monrovia v. Black (1928) 88 Cal.App. 686, 690.) The

court concluded, In the absence of any such requirement in the statute, the determination

of the legislative body that the fact exists on which their power to act depends is

sufficiently indicated by their pr oceeding to act. ( Ibid .)

And as far back as 1947, the Second District Court of Appeal characterized the

law as well settled and explained: [T]he question as to whether such a rule is

necessary and desirable is not a judicial question. The courts are not charged with the

responsibility of determining the wisdom of the rule. That question was for the board to

determine. And as the trial judge observed, That the board deemed the rule desirable is

evidenced conclusively by its adoption. ( Perez v. Board of Police Commrs. (1947)

78 Cal.App.2d 638, 643.)

The Authority does not suggest that the validity of bond authorization is never

subject to judicial review, that a bond finance committee can or should approve every


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request for bond authorization as a matter of course, or that courts must validate every

authorization of bonds for which validation is sought. Rather, the Authority focuses on

the exceptionally broad discretion conferred on any administrative or legislative body

charged with making the mere determination that an action is desirable. Given such

unencumbered discretion, there is little room for judicial intervention. Real parties in

interest simply fail to appreciate the critical distinction between other types of challenges

to validation and the very specific determination made by the Finance Committee that the

issuance of the bonds was necessary or desirable. Thus, their reliance on Boelts , supra ,

127 Cal.App.4th 116 and Poway Royal Mobilehome Owners Assn. v. City of Poway

(2007) 149 Cal.App.4th 1460 ( Poway ) misses the mark.Indeed, Boelts highlights the distinction real parties in interest ignore. The case

involved a reverse validation action challenging the validity of an amendment to a

redevelopment plan. ( Boelts , supra , 127 Cal.App.4th at p. 125.) The community

redevelopment laws required the city to make a finding that the project area was blighted

based on clearly articulated and documented evidence. (Health & Saf. Code, 33367,

subd. (d); see Boelts , at p. 127.) Because the governing statute expressly circumscribed

the legislative bodys discretion by requiring evidence to support the finding, the court

invoked the familiar substantial evidence standard of review. ( Boelts , at p. 134.) By

contrast, the statutory requirement that the legislative body find that an amendment to a

redevelopment plan was necessary or desirable was not substantive and did not limit

the citys discretion. ( Id . at p. 128, fn. 13.) The necessary or desirable determination

was not subject to judicial review in Boelts .

Poway , supra , 149 Cal.App.4th 1460 also is inapposite. According to pertinent

federal law, the city was required to hold a public hearing before the bond qualified to be

used for a residential rental project for low income residents. (26 U.S.C.

147(f)(2)(B)(i); Poway , at p. 1482.) The city noticed a hearing and thereafter adopted

resolutions approving the sale of a mobile home park to the redevelopment agency.


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( Poway , at p. 1482.) The homeowners association challenged a judgment in the ensuing

validation action, claiming the city presented no evidence at the hearing to support the

sale. ( Ibid .) Because the city was compelled by law to hold a hearing, the Court of

Appeal invoked the substantial evidence standard of review. We examine the

administrative record to determine whether substantial evidence supports the trial courts

findings. ( Id . at p. 1479.)

Finance committees under the Bond Law, and the Finance Committee established

by the Bond Act, are given the statutory charge to determine when the issuance of bonds

is necessary or desirable, but they are not required to conduct a hearing, take evidence,

or make findings. The Bond Act does not require the Authority to provide any support tothe Finance Committee for its request for authorization of the issuance of the bonds,

apparently contemplating that all the necessary support is provided through the reports

the Authority is required by section 2704.08 to submit to the Legislature. Real parties in

interest have cited no statute that imposes duties on a finance committee commensurate

with the evidentiary requirements compelled by the statutes applicable in Boelts and

Poway . As a result, real parties in interest offer neither a statute nor an analogous case to

support the novel proposition that a necessary or desirable determination must be

supported by substantial evidence in the administrative record.

Moreover, such an intrusive standard would offend the fundamental separation of

powers between the legislative and judicial branches of government. The Supreme Court

has cautioned courts to exercise a highly deferential and limited review, out of deference

to the separation of powers between the Legislature and the judiciary, to the legislative

delegation of administrative authority to the agency, and to the presumed expertise of the

agency within its scope of authority. (California Hotel & Motel Assn. v. Industrial

Welfare Com. (1979) 25 Cal.3d 200, 211-212.) Where, as here, the administrative

agency performs a discretionary quasi-legislative act, judicial review is at the far end of a

continuum requiring the utmost deference. ( Carrancho v. California Air Resources


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Board (2003) 111 Cal.App.4th 1255, 1265.) A n agencys exercise of discretionary

legislative power will be disturbed only if the action taken is so palpably unreasonable

and arbitrary as to show an abuse of discretion as a matter of law. This is a highly

deferential test. [Citation.] ( Ibid .)

There is no support for real parties in interests allegation that the Finance

Committees determination was arbitrary, capricious, or palpably unreasonable as a

matter of law. The only basis required by the Bond Act for the Finance Committee to act

is the Authority s request to the Finance Committee. (Sts. & Hy. Code, 2704.11,

subd. (a), incorporating Gov. Code, 16730; Sts. & Hy. Code, 2704.13.) The request

contained all the information that the Finance Committee needed to authorize bonds forvalidation the fact that the Authority was requesting the authorization of bonds pursuant

to the Bond Act and only for purposes authorized by the Bond Act. The Finance

Committee also had before it a draft resolution detailing the authorization of the bonds

and the structure of the eventual sales, including that the bonds sold would not exceed the

appropriation authorized by the Legislature. A s a result, the Finance Committees

determination that it is necessary or desirable to authorize issuance of the bonds to

carry out the purposes of the Bond Act rests on the draft resolution and the Finance

Committees assessment of need, unencumbered by the need to identify the facts or

express reasons for supporting the determination. Real parties in interest would have us

impose more of an evidentiary burden on the Finance Committee than is required by the

governing statute, and thus would have us cramp the broad discretion the Finance

Committee is afforded by the applicable statutes and intrude into the quasi-legislative role

it was assigned by the voters. We reject the invitation to embark upon such an

unwarranted and unwise intrusion into the administrative process.

Real parties in interest make two arguments we can summarily dismiss. First, they

assert that the F inance Committees determination whether or not issuance of the bonds

is necessary or desirable is subject to a substantial evidence standard of review, insisting


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that the addition of the two words or not alters the calculus on the amount of discretion

the Finance Committee wields and therefore the quantum of evidence needed to justify

the exercise of that discretion. The argument is without merit . The term whether

necessarily means whether or not. Either way, the Finance Committee must decide if

issuance is necessary or desirable, and the mere redundancy of the language does not

thereby increase the scrutiny a court must give to that determination.

Second, real parties in interest suggest that to allow the Finance Committee utmost

discretion in determining whether issuance is necessary or desirable is to allow it to

operate as a mere rubber stamp. Real parties in interest further contend that in that case

there is no purpose for the Finance Committee and we should not assume the voterswould engage in the idle act of creating a meaningless decision-making body. Their

argument requires us to presume that the State Treasurer, the Director of the Department

of Finance, the Controller, the Secretary of Business, Transportation and Housing, and

the Chairperson of the Authority, all members of the Finance Committee with

considerable public finance expertise, would shirk their responsibility to prudently

control the timing of the authorization of the bonds. We do not agree that the creation of

a Finance Committee with considerable discretion to employ its expertise would act as a

mere rubber stamp. Rather, by enacting the Bond Act, the voters decided to mimic the

same bifurcation of roles included in the Bond Law; that is, the voters intended to

establish one body with expertise over managing the project and a second body with

considerable public finance expertise to exercise its discretion over the timing and

amount of the issuance of the bonds. Our deference to the Finance C ommittees

determination as to when the bonds are necessary or desirable does not render the voters

reliance on its expertise an idle act.

Real parties in interest insist that even if we reject their argument that the

necessary or desirable finding was not supported by substa ntial evidence, we should

not enter judgment validating the bonds because the Authority improperly requested the


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odds with, or beyond the scope of, the articulated purpose of the act or the description of

the project on the ballot.

For example, in East Bay Mun. Util. Dist. v. Sindelar (1971) 16 Cal.App.3d 910

( EBMUD ), the voters approved a measure allowing the utility district to incur a bonded

indebtedness to finance a 10- year Water Development Project for the East Bay Area in

1958. ( Id . at pp. 914-915.) By 1967 the construction of its physical components had

been completed, with $84 million in authorized but unissued bonds remaining. The

district celebrated the completion of the project. But in 1970 the board of directors

authorized the issuance and sale of another $12 million in bonds based on its

determination the bonds were deemed necessary and desirable . . . to provideadditional moneys to finance the Water Development Project for East Bay Area as

authorized at . . . [the 1958 bond] . . . election. ( Id . at pp. 915-916.) The district

treasurer refused to sign the duly authorized bonds on the following grounds:

1. That . . . [the district] . . . is without authority to issue said Bonds of Series G or any

part thereof for the reason that the Water Development Project for East Bay Area has

been fully constructed and completed and that no authority exists for the issuance of said

bonds purely for the expansion of the water system of the District based upon the

expanded area and increased water demand of the District since the date of . . . [the

1958 bond] . . . election, to wit, since June 3, 1958. 2. That it was generally understood

by the electors of the District voting upon the proposition for the issuance of said bonds

that the construction program would end within a period of ten years and that no

additional bonds would be issued or sold more than ten years after the date of said

election and that the authority to issue and sell said bonds accordingly expired on June 3,

1968, to wit, ten years from the date of said election. 3. That more than twelve years

have elapsed since the date of said election and by reason solely of the lapse of time the

authority granted by the electors for the issuance and sale of the bonds has ceased to have


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any effect and the authority of the District to issue and sell said bonds has accordingly

expired. ( Id . at p. 917.)

The Court of Appeal issued a peremptory writ of mandate to compel the treasurer

to execute the bonds. ( EBMUD , supra , 16 Cal.App.3d at p. 920.) Despite the fact that

the construction of the water system was complete and the language of the promotional

materials for the ballot measure represented that the construction program would end

within 10 years and no additional bonds would be issued or sold, the court found the

bond proposition had been submitted to t he voters in broad and general terms. ( Id . at

p. 919.) Quoting the rationale of Clark v. Los Angeles (1911) 160 Cal. 317, 320, the

court stated: The purpose for which . . . [bond] . . . elections are required is to obtainthe assent of the voters to a public debt, to the amount, and for the object, proposed. The

amount must, of course, be stated on the ballot; the general purpose must be stated with

sufficient certainty to inform the voters and not mislead them, as to the object intended;

but the details of the proposed work or improvement need not be given at length in the

ballot. [Citation.] Thus, the language of the districts Ordinance No. 191, and of the

ballot proposition which it addressed to the electorate, was sufficiently specific as to the

object and purposes of the bonds proposed.

The courts have been particularly attuned to the fluidity of the planning process

for large public works projects. In fact, the Supreme Court has allowed substantial

deviation between the preliminary plans submitted to the voters and the eventual final

project, admonishing : [T]he authority to issue bonds is not so bound up with the

preliminary plans as to sources of supply upon which the estimate is based that the

proceeds of a valid issue of bonds cannot be used to carry out a modified plan if the

change is deemed advantageous. ( Cullen v. Glendora Water Co. (1896) 113 Cal. 503,

510.) Similarly, the court broadly construed the purpose of the proposition approving the

Bay Area Rapid Transit District and sanctioned the relocation of one of the terminal

stations. The court wrote, Obviously, the statutes, the notice of election and the ballot


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proposition itself contemplate a broad authority for construction of a three-county rapid

transit system. In the wide scope of this substantial transit project, the deviation of

1 1/2 miles in location of a single station is but a minor change in the tentative plan which

was relied upon only to forecast feasibility of the project as a whole. ( Mills , supra ,

261 Cal.App.2d at p. 669.)

The development of a high-speed rail system for the state of California is even

more complex than a regional water or transportation system. The Authority is obligated

to prepare preliminary and final funding plans as well as business plans every two years

as it fine-tunes the construction of the project. Thus, it may be that the specifics of the

project deviate from some of the preliminary planning documents or constitute minorchanges from tentative plans. We cannot and should not decide whether any future use of

bond funds will stray too far from the express language used in Proposition 1A to

describe the purpose and parameters of the Bond Act. The pleadings and the trial courts

rulings, in fact, were extremely limited in scope.

The complaint filed by the Authority and the Finance Committee was limited to

the validity of the issuance of the bonds for any purpose authorized by the Bond Act, and

as a consequence, it did not identify any particular use of the bond proceeds. Nor did the

bond resolutions identify any particular use. Because there is no final funding plan and

the design of the system remains in flux, as does the funding mechanism to support it, we

simply cannot determine whether the project will comply with the specific requirements

of the Bond Act and whether any future deviations will be considered significant or

trivial. 7 To allow real parties in interest to prematurely challenge future potential uses of

7 We reject the First Free Will Baptist Churchs contention that Senate Bill No. 1029 andthe revised business plan set forth the uses of the bond proceeds and those documentsdemonstrate that the high-speed rail system to be built is not the same project approved

by the voters. Senate Bill No. 1029 expressly requires the Authority to prepare manymore reports, approvals, and certifications, and the revised business plan is subject to


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the bonds would undermine the purpose of the validation action and interpose an infinite

number of obstacles to the public financing of public projects.

The Attorney General points out that whether or not any particular later

expenditure of bond funds would comply with the Bond Act is not relevant to the validity

of bond authorization and, as the cases cited by real parties in interest demonstrate, can

be adjudicated in separate actions. (See, e.g., Tooker v. San Francisco Bay Area Rapid

Transit Dist. (1972) 22 Cal.App.3d 643, 649, 652.) The trial court agreed. Issues

regarding the use of proceeds are separate from the issue raised in this validation action,

which is whether the bonds were properly authorized. In denying requests for judicial

notice of documents from the Tos action because they were irrelevant, the courtrecognized that the only statutes and documents it would consider in the validation action

were those relating to bond authorization. The court ruled that [t]he issue before the

Court in this validation proceeding is strictly limited to whether the Finance Committees

determination that issuance of bonds was necessary and desirable as of March 18, 2013 is

supported by any evidence in the record. . . . [] . . . [] Because this ruling disposes of

the validation action, the Court finds it unnecessary to address or resolve any of the other

arguments raised by the [real parties in interest] in opposition to the complaint. Thus,

the trial court did not rule on the issue real parties in interest urge us to decide.

The validity of the authorization, therefore, is the only issue framed by the

pleadings and decided by the trial court. The final funding plan and additional reports

required by section 2704.08, subdivision (d) are yet to be prepared and approved by the

Authority, let alone submitted to and approved by the Director of the Department of

Finance. It is unclear, therefore, whether the final funding plan will recommend the

expenditure of bond funds to be applied only to the specific object described in

biennial revision and updates. Moreover, the final funding plan has not been submitted.Simply put, it is too soon to determine how the Authority will specifically use the bond

proceeds. At issue is authorization, not expenditure.


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Proposition 1A. (Cal. Const., supra , art. XVI, 1.) In other words, it is too soon to

determine whether the project will be consistent with the parameters the voters approved.

Real party in interest Union Pacific Railroad Company urges us to expressly limit

the scope of the validation judgment. We agree that an introductory paragraph describing

the Nature of the Action in the validation complaint is at odds with the position the

Authority has taken in its briefing submitted to this court and, together with a few overly

broad phrases in one paragraph of the prayer, justifies Union Pacifics concerns that a

judgment validating authorization might also validate future unlawful expenditures. The

paragraph reads: [Petitioners] further request a judgment declaring that all proceedings

taken by [petitioners] in connection with the issuance and sale of the bonds, thecommercial paper notes, and the refunding bonds are in conformity with the applicable

provisions of all laws and enactments at any time in force or controlling upon such

proceedings, whether imposed by constitution, statute, regulation, or otherwise; and that

once declared valid, any challenges (including pending challenges) based on uses of

proceeds of the bonds, commercial paper notes, or refunding bonds will not affect the

determination of validity of the bonds, commercial paper notes, and refunding bonds, or

the determination of validity of any contracts related to the issuance and sale of the

bonds, commercial paper notes, or refunding bonds.

The prayer, for the most part, is more carefully crafted. Each of the following

paragraphs limits the validation to the actual authorization and all the conditions, things,

and acts required by law to exist, happen, or be performed before the authorization:

[3.]a. All conditions, things, and acts required by law to exist, happen, or be

performed precedent to the adoption of the Resolutions, and the terms and conditions

thereof, including the authorization for the issuance and sale of the Bonds, Notes, and any

Refunding Bonds, have existed, happened, and been performed in the time, form, and

manner required by law.


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b. [Petitioners] are legally existing and have the authority under the law to cause

the issuance and sale of the Bonds and Notes and to cause the issuance and sale of

Refunding Bonds to refund Bonds, Notes, or Refunding Bonds previously issued, as

authorized by the Bond Act and the Resolutions; [] . . . []

d. The Bonds, Notes, and Refunding Bonds to be issued pursuant to the Bond

Act, when executed and delivered, will constitute valid and binding general obligations of

the State, and any contracts related to the issuance and sale of the Bonds, Notes, or

Refunding Bonds will constitute valid and binding obligations of the State, under the

Constitution and laws of the State of California[.]

Paragraph 3.c., however, gives rise to the same concern as the introductory paragraph. The first part of paragraph 3.c. is consistent with the argument the Authority

has advanced throughout these proceedings, and that is, the validation judgment does not

determine the validity of future uses of the bond proceeds. The innocuous language

reads: All proceedings by and for [petitioners] in connection with the Bonds, Notes, and

Refunding Bonds to be issued pursuant to the Bond Act, including the adoption of the

Resolutions and the authorization of the Bonds, Notes, and any Refunding Bonds, were,

are . . . . But then the language becomes susceptible to Union Pacifics charge that it is

dangerously overbroad, with the potential to foreclose future challenges to unlawful uses

of the bond proceeds. The paragraph finishes as follows: and will be valid and binding,

and were, are, and will be in conformity with the applicable provisions of all laws and

enactments in force or controlling upon such proceedings, whether imposed by law,

Constitution, statute, regulation, or otherwise[.]

By contrast, paragraph 3.e. expressly limits the validation judgment to the

authorization of the bonds and not to use of the proceeds. Paragraph 3.e. states : Any

challenges (including pending challenges) based on uses of proceeds of the Bonds, Notes,

or Refunding Bonds will not affect the determination of validity of the Bonds, Notes, and

any Refunding Bonds to be issued and sold, or the determination of validity of any


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contracts related to the issuance and sale of the Bonds, Notes, or Refunding Bonds.

Despite the plain language of paragraph 3.e., the overly broad language used in the last

phrases of paragraph 3.c. gives rise to unnecessary ambiguity and potential mischief. To

ensure there is no ambiguity, we will direct the trial court to delete this language as set

forth in our disposition.

II

The Tos Action

Petitioners ask us to direct the trial court to vacate the peremptory writ of mandate

commanding them to rescind the preliminary funding plan and to redo that plan.

( 2704.08, subd. (c).) Although we agree with the Tos real parties that the voters clearlyintended to place the Authority in a financial straitjacket by establishing a mandatory

multistep process to ensure the financial viability of the project, we agree with petitioners

that issuance of the writ violates very basic principles circumscribing when and against

whom a writ of mandate may issue. In short, the Tos real parties challenge to the

preliminary funding plan was too late to have any practical effect, and it is too early to

challenge a yet-to-be approved final funding plan as required by section 2704.08,

subdivision (d).

A. What are the guiding legal pri nciples?

Four simple words resolve the issues before us: clear, present, ministerial, and

duty. The refrain is a familiar one. To obtain writ relief under Code of Civil Procedure

section 1085, a petitioner must demonstrate that the respondent has a clear, present, and

ministerial duty that inures to the petitioners benefit. ( County of San Diego v. State of

California (2008) 164 Cal.App.4th 580, 593 ( County of San Diego ); Carrancho , supra ,

111 Cal.App.4th at pp. 1264-1265; Agosto v. Board of Trustees of Grossmont-Cuyamaca

Community College Dist. (2010) 189 Cal.App.4th 330, 335-336; Tomra Pacific, Inc. v.

Chiang (2011) 199 Cal.App.4th 463, 491.) From this general principle, several others

follow. A writ is not available to enforce abstract rights ( Gardner v. Superior Court


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(2010) 185 Cal.App.4th 1003, 1008), to command futile acts with no practical benefits

(County of San Diego , supra , 164 Cal.App.4th at pp. 595-596; Associated Students of

North Peralta Community College v. Board of Trustees (1979) 92 Cal.App.3d 672, 680-

681), or to intermeddle in the preliminary stages of an administrative planning process

(California Water Impact Network v. Newhall County Water Dist. (2008)

161 Cal.App.4th 1464 ( C-WIN ).) Nor will a writ lie if the respondent has an obligation to

act under another law ( City of Fremont v. San Francisco Bay Area Rapid Transit Dist.

(1995) 34 Cal.App.4th 1780, 1790), the petitioner s rights are otherwise protected

( Duncan v. Superior Court (1935) 3 Cal.2d 143, 145), or in the absence of prejudice

( Board of Supervisors v. Rechenmacher (1951) 105 Cal.App.2d 39, 43; In re C. T. (2002)100 Cal.App.4th 101, 111). In other words, a writ of mandate must be necessary

( Duncan , supra , 3 Cal.2d at p. 145); courts will not issue a useless or unenforceable writ

(County of San Diego , supra , 164 Cal.App.4th at pp. 595-596). A writ is not to be used

to control the exercise of discretion, but to ensure that ministerial duties have been

fulfilled. ( California School Bds. Assn. v. State of California (2011) 192 Cal.App.4th

770, 797.)

The Tos real parties insist that the Authority had a ministerial duty to prepare a

preliminary funding plan that includes, identifies, or certifies each of the 11 components

set forth in the statute. ( 2704.08, subd. (c)(2)(A)-(K).) Where, as here, the purported

duty is defined in a statute enacted by the people, a pure question of law is presented and

well-worn principles of statutory construction guide our review. ( California Chamber of

Commerce v. Brown (2011) 196 Cal.App.4th 233, 248-249.) Statutory construction is an

inherently judicial task and our review is de novo. ( Carrancho , supra , 111 Cal.App.4th

at p. 1266 .) Whether a particular statute is intended to impose a mandatory duty,

rather than a mere obligation to perform a discretionary function, is a question of

statutory interpretation for the courts. [Citation.] ( Haggis v. City of Los Angeles

(2000) 22 Cal.4th 490, 499.)


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As pointed out by the Tos real parties, ascertaining the will of the electorate is

paramount. ( County of Los Angeles v. State of California (1987) 43 Cal.3d 46, 56.)

Statutes adopted by the voters must be construed liberally in favor of the peoples right to

exercise their reserved powers, and it is the duty of the courts to jealously guard the right

of the people by resolving doubts in favor of the use of those reserved powers. ( Shaw v.

People ex rel. Chiang (2009) 175 Cal.App.4th 577, 596 ( Shaw ).) The voters as well as

the bondholders have an interest in the continued integrity of voter-ratified bond

proposals. (Veterans of Foreign Wars v. State of California (1974) 36 Cal.App.3d 688,

692.) And, as the Tos real parties remind us, an administrative agency cannot change

course after the electors have voted. ( OFarrell , supra , 189 Cal. 343, 344, 349.)Yet the same basic rules of statutory construction apply to statutes enacted by the

voters as to statutes passed by the Legislature. ( Professional Engineers in California

Government v. Kempton (2007) 40 Cal.4th 1016, 1037.) We must look to the plain

language of the statute to determine the intent of the electors ( Terminal Plaza Corp. v.

City and County of San Francisco (1986) 186 Cal.App.3d 814, 826); but the words of the

statute are given their ordinary meaning in the context of the statute as a whole and in

light of the entire statutory scheme ( Professional Engineers , supra , 40 Cal.4th at p. 1037;

Doe v. Albany Unified School Dist. (2010) 190 Cal.App.4th 668, 675-676).

The question posed is whether there was a clear and present ministerial duty

imposed by the Bond Act on the Authority to redo the preliminary funding plan at the

time the trial court issued the writ, given that the Legislature appropriated the funds

despite the Authoritys failure to submit a preliminary funding plan in compliance with

the Bond Act.

B. I s there a clear and present mini ster ial duty to redo the preliminary fu ndingplan?

The parties present opposing views about the intent of the voters and the scope of

the duties they created under the Bond Act. The Attorney General argues the voters


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approved the act to construct a high-speed rail system as quickly as possible to reduce

traffic congestion and greenhouse gasses and to create jobs. (Stats. 2008, ch. 267, 8.)

While the Attorney General concedes the voters imposed more financial restraints on the

Authority than in more typical infrastructure projects, she insists the duty to prepare a

preliminary funding plan mandated by section 2704.08, subdivision (c) was for the

exclusive benefit of the Legislature, not the voters or the bondholders. In her view, the

preliminary funding plan informed the Legislature about the Authoritys projections and

progress and generated additional input from the peer review group and others. Thus, it

achieved the purpose envisioned by the voters, and there is no language in the statute to

evidence an additional intent to curtail the Legislatures prerogative to approve theappropriation in spite of a deficient preliminary funding plan.

The Tos real parties, on the other hand, discount the environmental and economic

benefits the voters sought to achieve and emphasize the extraordinary duties the voters

imposed on the Authority to substantiate the financial and environmental viability of the

project before the bonds could be authorized, sold, and spent. The Tos real parties further

contend the mandatory language of the statute was designed for the express benefit of the

voters; that is, the voters insisted on an elaborate financial mechanism to ensure they

would not be obligated to subsidize a boondoggle or pay for a stranded segment of the

rail system. Because high-speed rail is the most expensive public infrastructure project in

the states history, the Tos real parties passionately argue that the voters were only

willing to bear such an enormous cost by minimizing the risk, imposing a clear and

nondiscretionary High -Speed Passenger Train Financing Program on the Authority,

and mandating a number of other restrictive fiscal protections.

As a matter of statutory construction, there is merit to many of the Tos real parties

arguments. We give effect, as we must, to the plain language of article 2 as an

indispensable part of the entire Bond Act. Article 2 is dedicated exclusively to the

High-Speed Passenger Train Financing Program. As described above, the Authority is


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Nevertheless, mandate does not lie to vindicate abstract rights. Mandamus is

steeped in practicality. For this reason, there must be a present duty for a writ of

mandamus to issue. Here the question is not whether the Authority had a mandatory and

ministerial duty to issue a preliminary funding plan compliant with section 2704.08,

subdivisions (c)(2)(D) and (K) at the time the plan was approved and then submitted to

the Legislature, for that critical time period has passed. Rather, the question is whether

the Authority has a mandatory ministerial duty to rescind the plan and redo it after the

Legislature appropriated the funds for issuance of the bonds approved by the voters. It is

the intervening appropriation by the Legislature that presents an insurmountable hurdle

for the Tos real parties. We explain this practical impediment in light of the wholestatutory scheme.

The Bond Act compels the Authority to prepare a preliminary funding plan for

submission to the Legislature and the Governor and a final funding plan for approval by

the Director of the Department of Finance before committing any proceeds of bonds.

The Tos real parties focus on the mandatory language indicating that the preliminary

funding plan shall identify the sources of all the funding for the usable segment and shall

certify that all environmental clearances have been obtained. But under the Bond Act,

bond funds cannot be committed and spent until the second and final funding plan is

approved by the Authority and submitted to the Director of the Department of Finance

and the Chairperson of the Joint Legislative Budget Committee, and an independent

financial consultant prepares a report. This latter report is particularly significant in that

the independent consultant must certify that construction can be completed as proposed

and is suitable for high-speed rail; the planned passenger train service will not require an

operating subsidy; and upon completion, passenger service providers can begin using the

tracks or stations. ( 2704.08, subdivision (d).) As a result, the first funding plan,

outlined in section 2704.08, subdivision (c), is indeed preliminary since commitments

cannot be made and construction cannot begin until a second, final funding plan is


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approved, an independent report attests to the financial integrity of the plan, the Joint

Legislative Budget Committee reviews it, and the Director of the Department of Finance

finds the plan is likely to be successfully implemented. ( 2704.08, subd. (d).)

Furthermore, the Legislature attached conditions to its appropriation of over

$8 billion to finance high-speed rail. As to the $1.1 billion appropriation for Bookend

funding, the Legislature restricted the encumbrance of the funds to ensure the final

funding plan was compliant with the Bond Act and all the necessary environmental

clearances had been obtained. As enacted, Senate Bill No. 1029 provides:

5. No funds appropriated in this item shall be encumbered prior to the High -

Speed Rail Authority submitting a detailed funding plan for the project or projects inaccordance with subdivision (d) of Section 2704.08 of the Streets and Highways Code to

(a) the Department of Finance, (b) the Chairperson of the Joint Legislative Budget

Committee, and (c) the peer review group established pursuant to Section 185035 of the

Public Utilities Code.

6. No funds appropriated in this item shall be encumbered for construction of a

project prior to completion of all project-level environmental clearances necessary to

proceed to construction and the final notices being contained in the funding plan for the

project.

7. Prior to the obligation of funds to any specific project, and subject to the

approval of the Department of Finance, the High-Speed Rail Authority Board shall

develop an accountability plan, consistent with Executive Order S-02-07, to establish

criteria and procedures to govern the expenditure of the bond funds in this appropriation,

and the outcomes that such expenditures are intended to achieve, including a detailed

project description and project cost. The procedures shall ensure that the investments

comply with requirements of applicable state and federal laws, and are consistent with

and advance the state high-speed train system. . . . (Stats. 2012, ch. 152, 3,

provisions 5-7, approved by Governor July 18, 2012.)


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This multilayer approval process is reminiscent of the statutory scenario in C-WIN ,

supra , 161 Cal.App.4th 1464. Before the developer could begin construction of a large

industrial/business park in the city of Santa Clarita (City), two reports were necessary: a

water supply assessment (WSA) and an environmental impact report (EIR). 8 ( Id . at

pp. 1471-1472.) The California Water Impact Network (C-WIN) sought a writ of

mandate to set aside the WSA prepared by the water district at the request of the City

before the EIR had been approved and certified. ( Id . at p. 1471.) C-WIN argued it was

entitled to directly challenge the WSA because it was a final determination by the water

supplier concerning the sufficiency of the water supply for a proposed project. ( Ibid .)

The Court of Appeal disagreed. ( Ibid .)Pursuant to the so-called WSA law (Wat. Code, 10910-10915), the water

supplier most likely to serve the project must, at the request of the lead agency under the

California Environmental Quality Act (CEQA; Pub. Resources Code, 21000 et seq.),

prepare the WSA. ( C-WIN , supra , 161 Cal.App.4th at pp. 1478-1480.) The Water Code

specifically mandates what information the WSA must include, and like the Tos real

parties here, C-WIN asserted the assessment was fatally deficient because it did not

satisfy the statutory requirements and was therefore subject to attack under either

administrative or traditional mandamus. ( C-WIN , at pp. 1480, 1483-1484.) The Court of

Appeal held that the petition failed to satisfy prerequisites common to both forms of

mandamus relief. ( Id . at p. 1484.) In short, the WSA was not a final determination,

finding, or decision as necessary to obtain relief by mandamus of either variety. ( Id . at

p. 1485.)

The court explained: Thus, in our view the WSA is . . . a technical, informational

advisory opinion of the water provider. Though the WSA is required by statute to

8 The WSA would become a part of the EIR.


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include an assessment of certain statutorily identified water supply issues and is required

to be included in the EIR, the WSAs role in the EIR process is akin to that of other

informational opinions provided by other entities concerning potential environmental

impacts such as traffic, population density or air quality. The fact that the duties of the

water provider in preparing the WSA and responsibility of the lead agency in requesting

the WSA are committed to statute does not change the fundamental nature of the WSA

itself as an advisory and informational document. ( C-WIN , supra , 161 Cal.App.4th at

p. 1486.)

In determining the propriety of mandamus relief, the Bond Act bears considerable

similarity to the Water Code and CEQA provis

california high-speed rail appeal court ruling

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